J.P. Morgan Securities LLC, et al.; Notice of Application and Temporary Order, 41829-41831 [2011-17816]

Download as PDF mstockstill on DSK4VPTVN1PROD with NOTICES Federal Register / Vol. 76, No. 136 / Friday, July 15, 2011 / Notices records to be maintained by funds. The rule also requires certain underwriters, brokers, dealers, depositors, and investment advisers to maintain the records that they are required to maintain under federal securities laws. There are approximately 4218 investment companies registered with the Commission, all of which are required to comply with rule 31a–1. For purposes of determining the burden imposed by rule 31a–1, the Commission staff estimates that each fund is divided into approximately four series, on average, and that each series is required to comply with the recordkeeping requirements of rule 31a–1. Based on conversations with fund representatives, it is estimated that rule 31a–1 imposes an average burden of approximately 1750 hours annually per series for a total of 7000 annual hours per fund. The estimated total annual burden for all 4218 funds subject to the rule therefore is approximately 29,526,000 hours. Based on conversations with fund representatives, however, the Commission staff estimates that even absent the requirements of rule 31a–1, 90 percent of the records created pursuant to the rule are the type that generally would be created as a matter of normal business practice and to prepare financial statements, estimated to be approximately 26,573,400 annual hours. Thus, the Commission staff estimates that the total annual burden associated with rule 31a–1 is 2,952,600 hours. The estimate of average burden hours is made solely for the purposes of the Paperwork Reduction Act, and is not derived from a comprehensive or even a representative survey or study. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. Written comments are requested on: (a) Whether the collection of information is necessary for the proper performance of the functions of the Commission, including whether the information has practical utility; (b) the accuracy of the Commission’s estimate of the burden(s) of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication. VerDate Mar<15>2010 16:55 Jul 14, 2011 Jkt 223001 Please direct your written comments to Thomas Bayer, Director/Chief Information Officer, Securities and Exchange Commission, c/o Remi PavlikSimon, 6432 General Green Way, Alexandria, VA 22312; or send an e-mail to: PRA_Mailbox@sec.gov. Dated: July 7, 2011. Cathy H. Ahn, Deputy Secretary. [FR Doc. 2011–17815 Filed 7–14–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. IC–29719; 812–13919] J.P. Morgan Securities LLC, et al.; Notice of Application and Temporary Order July 11, 2011. Securities and Exchange Commission (‘‘Commission’’). ACTION: Temporary order and notice of application for a permanent order under section 9(c) of the Investment Company Act of 1940 (‘‘Act’’). AGENCY: Applicants have received a temporary order exempting them from section 9(a) of the Act, with respect to an injunction entered against J.P. Morgan Securities LLC (‘‘JPMS’’) on July 8, 2011 by the United States District Court for the District of New Jersey (‘‘Injunction’’) until the Commission takes final action on an application for a permanent order. Applicants also have applied for a permanent order. APPLICANTS: JPMS; Bear Stearns Asset Management Inc. (‘‘BSAM’’), Bear Stearns Health Innoventures Management, L.L.C. (‘‘BSHIM’’), BSCGP Inc. (‘‘BSGCP’’), Constellation Growth Capital LLC (‘‘Constellation’’), Constellation Ventures Management II, LLC (‘‘Constellation II’’), Highbridge Capital Management, LLC (‘‘Highbridge’’), JF International Management Inc. (‘‘JFIMI’’), JPMorgan Asset Management (UK) Limited (‘‘JPMAMUK’’), JPMorgan Distribution Services, Inc. (‘‘JPMDS’’), J.P. Morgan Institutional Investments, Inc. (‘‘JPMII’’), J.P. Morgan Investment Management Inc. (‘‘JPMIM’’), J.P. Morgan Latin America Management Company, LLC (‘‘JPMLAM’’), J.P. Morgan Partners, LLC (‘‘JPMP’’), J.P. Morgan Private Investments Inc. (‘‘JPMPI’’), OEP CoInvestors Management II, Ltd. (‘‘OEP II’’), OEP Co-Investors Management III, Ltd. (‘‘OEP III,’’ and together with OEP II, the ‘‘OEP Entities’’), Security Capital Research & Management Incorporated SUMMARY OF APPLICATION: PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 41829 (‘‘Security Capital’’), Sixty Wall Street GP Corporation (‘‘Sixty Wall GP’’), Sixty Wall Street Management Company, LLC (‘‘Sixty Wall Management’’) and Technology Coinvestors Management, LLC (‘‘TCM’’) (each an ‘‘Applicant’’ and collectively, the ‘‘Applicants’’).1 FILING DATE: The application was filed on July 7, 2011 and amended on July 11, 2011. HEARING OR NOTIFICATION OF HEARING: An order granting the application will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission’s Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on August 5, 2011, and should be accompanied by proof of service on applicants, in the form of an affidavit or, for lawyers, a certificate of service. Hearing requests should state the nature of the writer’s interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission’s Secretary. ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549– 1090; Applicants: JPMS, 338 Madison Avenue, New York, NY 10179; BSAM, BSHIM, BSCGP, Constellation II, JPMII, JPMIM, JPMLAM, JPMP, JPMPI, Sixty Wall GP, Sixty Wall Management and TCM, 270 Park Avenue, New York, NY 10017; Constellation and Highbridge, 49 West 57th Street, 32nd Floor, New York, NY 10019; JFIMI, 21st Floor, Chater House, 8 Connaught Road Central, Hong Kong; JPMAMUK, 125 London Wall, London, UK, EC2Y5AJ; JPMDS, 1111 Polaris Parkway, Columbus, OH 43240; OEP Entities, 320 Park Avenue, 18th Floor, New York, NY 10022; and Security Capital, 10 South Dearborn Street, Suite 1400, Chicago, IL 60603. FOR FURTHER INFORMATION CONTACT: Jean E. Minarick, Senior Counsel, at 202– 551–6811 or Daniele Marchesani, Branch Chief, at 202–551–6821 (Division of Investment Management, Office of Investment Company Regulation). SUPPLEMENTARY INFORMATION: The following is a temporary order and summary of the application. The complete application may be obtained via the Commission’s website by 1 Applicants request that any relief granted pursuant to the application also apply to any other company of which JPMS is or may become an affiliated person within the meaning of section 2(a)(3) of the Act (together with the Applicants, the ‘‘Covered Persons’’). E:\FR\FM\15JYN1.SGM 15JYN1 41830 Federal Register / Vol. 76, No. 136 / Friday, July 15, 2011 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES searching for the file number, or an applicant using the Company name box, at http://www.sec.gov/search/ search.htm, or by calling (202) 551– 8090. Applicants’ Representations 1. JPMS, a limited liability company organized under the laws of Delaware, is registered as a broker-dealer under the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’) and is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the ‘‘Advisers Act’’). JPMS does not currently serve as investment adviser, sub-adviser, or depositor of any registered investment company, or principal underwriter for any registered open-end investment company, registered unit investment trust (‘‘UIT’’) or registered face amount certificate company, or investment adviser of any employees’ securities company, as defined in section 2(a)(13) of the Act (‘‘ESC’’) (‘‘Fund Service Activities’’). ‘‘Funds’’ refers to the registered investment companies or ESCs for which a Covered Person provides Fund Service Activities. The ultimate parent of JPMS is J.P. Morgan Chase & Co. (‘‘JPMC’’). JPMC is a financial services holding company whose businesses provide a broad range of financial services to consumer and corporate customers. JPMC is also the ultimate parent of the other Applicants, who, as subsidiaries of the same ultimate parent, are under common control with JPMS. 2. BSAM is registered as an investment adviser under the Advisers Act and serves as investment adviser or sub-adviser to various Funds, including as a general partner that provides investment advisory services to various ESCs, which provide investment opportunities for highly compensated key employees, officer, directors and current consultants of JPMC and its affiliates.2 BSHIM, BSCGP, Constellation II, the OEP Entities and TCM serve as general partners that provide investment advisory services to various ESCs. Constellation serves as a sub-adviser to various ESCs. Highbridge, JFIMI, JPMAMUK, JPMIM, JPMPI, and Security Capital are registered as investment advisers under the Advisers Act and serve as investment advisers or sub-advisers to various Funds. JPMLAM, JPMP, Sixty Wall GP, Sixty Wall Management are registered as 2 Every Applicant that is a general partner that provides investment advisory services to one or more ESCs believes, for purposes of the application, that it is performing a function that falls within the definition of ‘‘investment adviser’’ in section 2(a)(20) of the Act. VerDate Mar<15>2010 16:55 Jul 14, 2011 Jkt 223001 investment advisers under the Advisers Act and serve as investment advisers or sub-advisers to ESCs. JPMDS is registered as a broker-dealer under the Exchange Act and serves as principal underwriter to various Funds. JPMII is registered as a broker-dealer under the Exchange Act and serves as placement agent to various Funds.3 3. On July 8, 2011, the United States District Court for the District of New Jersey entered a judgment, which included the Injunction, against JPMS (‘‘Judgment’’) in a matter brought by the Commission.4 The Commission alleged in the complaint (‘‘Complaint’’) that prior to at least 2005, JPMS engaged in fraudulent practices and made misrepresentations and omissions in connection with bidding on municipal reinvestment instruments. The Complaint alleged that JPMS engaged in fraudulent practices, misrepresentations, and omissions that affected the prices of certain reinvestment instruments, deprived certain municipalities of a presumption that their reinvestment instruments were purchased at fair market value, and/or jeopardized the tax-exempt status of certain securities. Based on the alleged misconduct described above, the Complaint alleged that JPMS violated section 15(c)(1)(A) of the Exchange Act. Without admitting or denying any of the allegations in the Complaint (other than those relating to the jurisdiction of the District Court over it and the subject matter, solely for purposes of this action), JPMS consented to the entry of the Injunction and other relief, including disgorgement, prejudgment interest, and civil monetary penalties. Applicants’ Legal Analysis 1. Section 9(a)(2) of the Act, in relevant part, prohibits a person who has been enjoined from engaging in or continuing any conduct or practice in connection with the purchase or sale of a security, or in connection with activities as an underwriter, broker or dealer, from acting, among other things, as an investment adviser or depositor of any registered investment company or a principal underwriter for any registered open-end investment company, registered UIT, or registered face3 JPMII serves as placement agent to JPMorgan Institutional Trust (‘‘Trust’’) with respect to three of its series. The Trust is an open-end investment company registered under the Act, but its shares are not registered under the Securities Act of 1933, as amended. JPMII believes, for purposes of the application, that it is performing a function that falls within the definition of principal underwriter in section 2(a)(29) of the Act. 4 U.S. Securities and Exchange Commission v. J.P. Morgan Securities LLC, Case No. 2:11–cv–03877– WJM (D.N.J. July 8, 2011). PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 amount certificate company or as investment adviser of an ESC. Section 9(a)(3) of the Act makes the prohibition in section 9(a)(2) applicable to a company, any affiliated person of which has been disqualified under the provisions of section 9(a)(2). Section 2(a)(3) of the Act defines ‘‘affiliated person’’ to include, among others, any person directly or indirectly controlling, controlled by, or under common control, with the other person. Applicants state that JPMS is an affiliated person of each of the other Applicants within the meaning of section 2(a)(3) of the Act. Applicants state that, as a result of the Injunction, they would be subject to the prohibitions of section 9(a) of the Act. 2. Section 9(c) of the Act provides that the Commission shall grant an application for exemption from the disqualification provisions of section 9(a) of the Act if it is established that these provisions, as applied to the Applicants, are unduly or disproportionately severe or that the conduct of the Applicants has been such as not to make it against the public interest or the protection of investors to grant the exemption. Applicants have filed an application pursuant to section 9(c) seeking a temporary and permanent order exempting them and other Covered Persons from the disqualification provisions of section 9(a). 3. Applicants believe they meet the standard for exemption specified in section 9(c). Applicants state that the prohibitions of section 9(a) as applied to them would be unduly and disproportionately severe and that the conduct of the Applicants has been such as not to make it against the public interest or the protection of investors to grant the exemption from section 9(a). 4. Applicants state that the alleged conduct giving rise to the Injunction did not involve any of the Applicants engaging in Fund Service Activities. Applicants also state to the best of their knowledge (i) none of the current directors, officers, or employees of the Applicants (other than JPMS) that are involved in providing Fund Service Activities (or any other persons in such roles during the time period covered by the Complaint) participated in the conduct alleged in the Complaint to have constituted the violations that provided a basis for the Injunction; and (ii) the personnel at JPMS who participated in the conduct alleged in the Complaint to have constituted the violations that provided a basis for the Injunction have had no, and will not have any, involvement in providing Fund Service Activities to the Funds on E:\FR\FM\15JYN1.SGM 15JYN1 mstockstill on DSK4VPTVN1PROD with NOTICES Federal Register / Vol. 76, No. 136 / Friday, July 15, 2011 / Notices behalf of the Applicants or other Covered Persons. 5. Applicants state that the inability of the Applicants to engage in Fund Service Activities would result in potentially severe financial hardships for the Funds they serve and the Funds’ shareholders or unitholders. Applicants state that they will distribute written materials, including an offer to meet in person to discuss the materials, to the boards of directors of the Funds (excluding for this purpose the ESCs) (the ‘‘Boards’’), including the directors who are not ‘‘interested persons,’’ as defined in section 2(a)(19) of the Act, of such Funds, and their independent legal counsel as defined in rule 0–1(a)(6) under the Act, if any, describing the circumstances that led to the Injunction, any impact on the Funds, and the application. Applicants state that they will provide the Boards with the information concerning the Injunction and the application that is necessary for the Funds to fulfill their disclosure and other obligations under the federal securities laws. 6. Applicants also state that, if they were barred from providing Fund Service Activities to registered investment companies and ESCs, the effect on their businesses and employees would be severe. Applicants state that they have committed substantial resources to establish an expertise in providing Fund Service Activities. Applicants further state that prohibiting them from providing Fund Service Activities would not only adversely affect their businesses, but would also adversely affect approximately 940 employees that are involved in those activities. Applicants also state that disqualifying certain Applicants from continuing to provide investment advisory services to ESCs is not in the public interest or in furtherance of the protection of investors. Because the ESCs have been formed for the benefit of key employees, officers, directors and current consultants of JPMC and its affiliates, it would not be consistent with the purposes of the ESC provisions of the Act to require another entity not affiliated with JPMC to manage the ESCs. In addition, participating employees of JPMC and its affiliates likely subscribed for interests in the ESCs with the expectation that the ESCs would be managed by an affiliate of JPMC. 7. Applicants state that Applicants and certain other affiliated persons of the Applicants have previously received orders under section 9(c) of the Act, as the result of conduct that triggered VerDate Mar<15>2010 16:55 Jul 14, 2011 Jkt 223001 section 9(a), as described in greater detail in the application. Applicants’ Condition Applicants agree that any order granting the requested relief will be subject to the following condition: Any temporary exemption granted pursuant to the application shall be without prejudice to, and shall not limit the Commission’s rights in any manner with respect to, any Commission investigation of, or administrative proceedings involving or against, Covered Persons, including without limitation, the consideration by the Commission of a permanent exemption from section 9(a) of the Act requested pursuant to the application or the revocation or removal of any temporary exemptions granted under the Act in connection with the application. Temporary Order The Commission has considered the matter and finds that the Applicants have made the necessary showing to justify granting a temporary exemption. Accordingly, It is hereby ordered, pursuant to section 9(c) of the Act, that Applicants and any other Covered Persons are granted a temporary exemption from the provisions of section 9(a), solely with respect to the Injunction, subject to the condition in the application, from July 8, 2011, until the Commission takes final action on their application for a permanent order. By the Commission. Cathy H. Ahn, Deputy Secretary. [FR Doc. 2011–17816 Filed 7–14–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 29720; File No. 812–13741] FQF Trust, et al.; Notice of Application July 11, 2011. Securities and Exchange Commission (‘‘Commission’’). ACTION: Notice of an application for an order under section 6(c) of the Investment Company Act of 1940 (the ‘‘Act’’) for an exemption from sections 2(a)(32), 5(a)(1), 22(d), and 22(e) of the Act and rule 22c–1 under the Act, under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and (a)(2) of the Act, and under section 12(d)(1)(J) for an exemption from sections 12(d)(1)(A) and 12(d)(1)(B) of the Act. AGENCY: PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 41831 Applicants request an order that would permit (a) Series of certain open-end management investment companies whose portfolios will consist of the component securities of a securities index to issue shares (‘‘Shares’’) redeemable in large aggregations only (‘‘Creation Units’’); (b) secondary market transactions in Shares to occur at negotiated market prices; (c) certain series to pay redemption proceeds, under certain circumstances, more than seven days after the tender of Shares for redemption; (d) certain affiliated persons of the series to deposit securities into, and receive securities from, the series in connection with the purchase and redemption of Creation Units; and (e) certain registered management investment companies and unit investment trusts outside of the same group of investment companies as the series to acquire Shares. APPLICANTS: FQF Trust (the ‘‘Trust’’), FFCM, LLC (‘‘FFCM,’’ and together with any entity controlling, controlled by or under common control with FFCM, ‘‘Adviser’’) and Foreside Fund Services, LLC (the ‘‘Distributor’’). DATES: Filing Dates: The application was filed on December 31, 2009 and amended on January 28, 2010, March 9, 2010, March 29, 2011, June 22, 2011, and July 11, 2011. HEARING OR NOTIFICATION OF HEARING: An order granting the application will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission’s Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on August 5, 2011 and should be accompanied by proof of service on applicants, in the form of an affidavit, or for lawyers, a certificate of service. Hearing requests should state the nature of the writer’s interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission’s Secretary. ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090; Applicants, 250 Congress Street, 5th Floor, Boston, MA 02110. FOR FURTHER INFORMATION CONTACT: Marilyn Mann, Special Counsel at (202) 551–6813, or Dalia Osman Blass, Branch Chief, at (202) 551–6821 (Division of Investment Management, Office of Investment Company Regulation). SUPPLEMENTARY INFORMATION: The following is a summary of the SUMMARY OF APPLICATION: E:\FR\FM\15JYN1.SGM 15JYN1

Agencies

[Federal Register Volume 76, Number 136 (Friday, July 15, 2011)]
[Notices]
[Pages 41829-41831]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-17816]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-29719; 812-13919]


J.P. Morgan Securities LLC, et al.; Notice of Application and 
Temporary Order

July 11, 2011.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Temporary order and notice of application for a permanent order 
under section 9(c) of the Investment Company Act of 1940 (``Act'').

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Summary of Application: Applicants have received a temporary order 
exempting them from section 9(a) of the Act, with respect to an 
injunction entered against J.P. Morgan Securities LLC (``JPMS'') on 
July 8, 2011 by the United States District Court for the District of 
New Jersey (``Injunction'') until the Commission takes final action on 
an application for a permanent order. Applicants also have applied for 
a permanent order.

Applicants: JPMS; Bear Stearns Asset Management Inc. (``BSAM''), Bear 
Stearns Health Innoventures Management, L.L.C. (``BSHIM''), BSCGP Inc. 
(``BSGCP''), Constellation Growth Capital LLC (``Constellation''), 
Constellation Ventures Management II, LLC (``Constellation II''), 
Highbridge Capital Management, LLC (``Highbridge''), JF International 
Management Inc. (``JFIMI''), JPMorgan Asset Management (UK) Limited 
(``JPMAMUK''), JPMorgan Distribution Services, Inc. (``JPMDS''), J.P. 
Morgan Institutional Investments, Inc. (``JPMII''), J.P. Morgan 
Investment Management Inc. (``JPMIM''), J.P. Morgan Latin America 
Management Company, LLC (``JPMLAM''), J.P. Morgan Partners, LLC 
(``JPMP''), J.P. Morgan Private Investments Inc. (``JPMPI''), OEP Co-
Investors Management II, Ltd. (``OEP II''), OEP Co-Investors Management 
III, Ltd. (``OEP III,'' and together with OEP II, the ``OEP 
Entities''), Security Capital Research & Management Incorporated 
(``Security Capital''), Sixty Wall Street GP Corporation (``Sixty Wall 
GP''), Sixty Wall Street Management Company, LLC (``Sixty Wall 
Management'') and Technology Coinvestors Management, LLC (``TCM'') 
(each an ``Applicant'' and collectively, the ``Applicants'').\1\
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    \1\ Applicants request that any relief granted pursuant to the 
application also apply to any other company of which JPMS is or may 
become an affiliated person within the meaning of section 2(a)(3) of 
the Act (together with the Applicants, the ``Covered Persons'').

Filing Date: The application was filed on July 7, 2011 and amended on 
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July 11, 2011.

Hearing or Notification of Hearing: An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing by writing to the Commission's Secretary 
and serving applicants with a copy of the request, personally or by 
mail. Hearing requests should be received by the Commission by 5:30 
p.m. on August 5, 2011, and should be accompanied by proof of service 
on applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Hearing requests should state the nature of the 
writer's interest, the reason for the request, and the issues 
contested. Persons who wish to be notified of a hearing may request 
notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street, NE., Washington, DC 20549-1090; Applicants: JPMS, 338 Madison 
Avenue, New York, NY 10179; BSAM, BSHIM, BSCGP, Constellation II, 
JPMII, JPMIM, JPMLAM, JPMP, JPMPI, Sixty Wall GP, Sixty Wall Management 
and TCM, 270 Park Avenue, New York, NY 10017; Constellation and 
Highbridge, 49 West 57th Street, 32nd Floor, New York, NY 10019; JFIMI, 
21st Floor, Chater House, 8 Connaught Road Central, Hong Kong; JPMAMUK, 
125 London Wall, London, UK, EC2Y5AJ; JPMDS, 1111 Polaris Parkway, 
Columbus, OH 43240; OEP Entities, 320 Park Avenue, 18th Floor, New 
York, NY 10022; and Security Capital, 10 South Dearborn Street, Suite 
1400, Chicago, IL 60603.

FOR FURTHER INFORMATION CONTACT: Jean E. Minarick, Senior Counsel, at 
202-551-6811 or Daniele Marchesani, Branch Chief, at 202-551-6821 
(Division of Investment Management, Office of Investment Company 
Regulation).

SUPPLEMENTARY INFORMATION: The following is a temporary order and 
summary of the application. The complete application may be obtained 
via the Commission's website by

[[Page 41830]]

searching for the file number, or an applicant using the Company name 
box, at http://www.sec.gov/search/search.htm, or by calling (202) 551-
8090.

Applicants' Representations

    1. JPMS, a limited liability company organized under the laws of 
Delaware, is registered as a broker-dealer under the Securities 
Exchange Act of 1934, as amended (the ``Exchange Act'') and is 
registered as an investment adviser under the Investment Advisers Act 
of 1940, as amended (the ``Advisers Act''). JPMS does not currently 
serve as investment adviser, sub-adviser, or depositor of any 
registered investment company, or principal underwriter for any 
registered open-end investment company, registered unit investment 
trust (``UIT'') or registered face amount certificate company, or 
investment adviser of any employees' securities company, as defined in 
section 2(a)(13) of the Act (``ESC'') (``Fund Service Activities''). 
``Funds'' refers to the registered investment companies or ESCs for 
which a Covered Person provides Fund Service Activities. The ultimate 
parent of JPMS is J.P. Morgan Chase & Co. (``JPMC''). JPMC is a 
financial services holding company whose businesses provide a broad 
range of financial services to consumer and corporate customers. JPMC 
is also the ultimate parent of the other Applicants, who, as 
subsidiaries of the same ultimate parent, are under common control with 
JPMS.
    2. BSAM is registered as an investment adviser under the Advisers 
Act and serves as investment adviser or sub-adviser to various Funds, 
including as a general partner that provides investment advisory 
services to various ESCs, which provide investment opportunities for 
highly compensated key employees, officer, directors and current 
consultants of JPMC and its affiliates.\2\ BSHIM, BSCGP, Constellation 
II, the OEP Entities and TCM serve as general partners that provide 
investment advisory services to various ESCs. Constellation serves as a 
sub-adviser to various ESCs. Highbridge, JFIMI, JPMAMUK, JPMIM, JPMPI, 
and Security Capital are registered as investment advisers under the 
Advisers Act and serve as investment advisers or sub-advisers to 
various Funds. JPMLAM, JPMP, Sixty Wall GP, Sixty Wall Management are 
registered as investment advisers under the Advisers Act and serve as 
investment advisers or sub-advisers to ESCs. JPMDS is registered as a 
broker-dealer under the Exchange Act and serves as principal 
underwriter to various Funds. JPMII is registered as a broker-dealer 
under the Exchange Act and serves as placement agent to various 
Funds.\3\
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    \2\ Every Applicant that is a general partner that provides 
investment advisory services to one or more ESCs believes, for 
purposes of the application, that it is performing a function that 
falls within the definition of ``investment adviser'' in section 
2(a)(20) of the Act.
    \3\ JPMII serves as placement agent to JPMorgan Institutional 
Trust (``Trust'') with respect to three of its series. The Trust is 
an open-end investment company registered under the Act, but its 
shares are not registered under the Securities Act of 1933, as 
amended. JPMII believes, for purposes of the application, that it is 
performing a function that falls within the definition of principal 
underwriter in section 2(a)(29) of the Act.
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    3. On July 8, 2011, the United States District Court for the 
District of New Jersey entered a judgment, which included the 
Injunction, against JPMS (``Judgment'') in a matter brought by the 
Commission.\4\ The Commission alleged in the complaint (``Complaint'') 
that prior to at least 2005, JPMS engaged in fraudulent practices and 
made misrepresentations and omissions in connection with bidding on 
municipal reinvestment instruments. The Complaint alleged that JPMS 
engaged in fraudulent practices, misrepresentations, and omissions that 
affected the prices of certain reinvestment instruments, deprived 
certain municipalities of a presumption that their reinvestment 
instruments were purchased at fair market value, and/or jeopardized the 
tax-exempt status of certain securities. Based on the alleged 
misconduct described above, the Complaint alleged that JPMS violated 
section 15(c)(1)(A) of the Exchange Act. Without admitting or denying 
any of the allegations in the Complaint (other than those relating to 
the jurisdiction of the District Court over it and the subject matter, 
solely for purposes of this action), JPMS consented to the entry of the 
Injunction and other relief, including disgorgement, prejudgment 
interest, and civil monetary penalties.
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    \4\ U.S. Securities and Exchange Commission v. J.P. Morgan 
Securities LLC, Case No. 2:11-cv-03877-WJM (D.N.J. July 8, 2011).
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Applicants' Legal Analysis

    1. Section 9(a)(2) of the Act, in relevant part, prohibits a person 
who has been enjoined from engaging in or continuing any conduct or 
practice in connection with the purchase or sale of a security, or in 
connection with activities as an underwriter, broker or dealer, from 
acting, among other things, as an investment adviser or depositor of 
any registered investment company or a principal underwriter for any 
registered open-end investment company, registered UIT, or registered 
face-amount certificate company or as investment adviser of an ESC. 
Section 9(a)(3) of the Act makes the prohibition in section 9(a)(2) 
applicable to a company, any affiliated person of which has been 
disqualified under the provisions of section 9(a)(2). Section 2(a)(3) 
of the Act defines ``affiliated person'' to include, among others, any 
person directly or indirectly controlling, controlled by, or under 
common control, with the other person. Applicants state that JPMS is an 
affiliated person of each of the other Applicants within the meaning of 
section 2(a)(3) of the Act. Applicants state that, as a result of the 
Injunction, they would be subject to the prohibitions of section 9(a) 
of the Act.
    2. Section 9(c) of the Act provides that the Commission shall grant 
an application for exemption from the disqualification provisions of 
section 9(a) of the Act if it is established that these provisions, as 
applied to the Applicants, are unduly or disproportionately severe or 
that the conduct of the Applicants has been such as not to make it 
against the public interest or the protection of investors to grant the 
exemption. Applicants have filed an application pursuant to section 
9(c) seeking a temporary and permanent order exempting them and other 
Covered Persons from the disqualification provisions of section 9(a).
    3. Applicants believe they meet the standard for exemption 
specified in section 9(c). Applicants state that the prohibitions of 
section 9(a) as applied to them would be unduly and disproportionately 
severe and that the conduct of the Applicants has been such as not to 
make it against the public interest or the protection of investors to 
grant the exemption from section 9(a).
    4. Applicants state that the alleged conduct giving rise to the 
Injunction did not involve any of the Applicants engaging in Fund 
Service Activities. Applicants also state to the best of their 
knowledge (i) none of the current directors, officers, or employees of 
the Applicants (other than JPMS) that are involved in providing Fund 
Service Activities (or any other persons in such roles during the time 
period covered by the Complaint) participated in the conduct alleged in 
the Complaint to have constituted the violations that provided a basis 
for the Injunction; and (ii) the personnel at JPMS who participated in 
the conduct alleged in the Complaint to have constituted the violations 
that provided a basis for the Injunction have had no, and will not have 
any, involvement in providing Fund Service Activities to the Funds on

[[Page 41831]]

behalf of the Applicants or other Covered Persons.
    5. Applicants state that the inability of the Applicants to engage 
in Fund Service Activities would result in potentially severe financial 
hardships for the Funds they serve and the Funds' shareholders or 
unitholders. Applicants state that they will distribute written 
materials, including an offer to meet in person to discuss the 
materials, to the boards of directors of the Funds (excluding for this 
purpose the ESCs) (the ``Boards''), including the directors who are not 
``interested persons,'' as defined in section 2(a)(19) of the Act, of 
such Funds, and their independent legal counsel as defined in rule 0-
1(a)(6) under the Act, if any, describing the circumstances that led to 
the Injunction, any impact on the Funds, and the application. 
Applicants state that they will provide the Boards with the information 
concerning the Injunction and the application that is necessary for the 
Funds to fulfill their disclosure and other obligations under the 
federal securities laws.
    6. Applicants also state that, if they were barred from providing 
Fund Service Activities to registered investment companies and ESCs, 
the effect on their businesses and employees would be severe. 
Applicants state that they have committed substantial resources to 
establish an expertise in providing Fund Service Activities. Applicants 
further state that prohibiting them from providing Fund Service 
Activities would not only adversely affect their businesses, but would 
also adversely affect approximately 940 employees that are involved in 
those activities. Applicants also state that disqualifying certain 
Applicants from continuing to provide investment advisory services to 
ESCs is not in the public interest or in furtherance of the protection 
of investors. Because the ESCs have been formed for the benefit of key 
employees, officers, directors and current consultants of JPMC and its 
affiliates, it would not be consistent with the purposes of the ESC 
provisions of the Act to require another entity not affiliated with 
JPMC to manage the ESCs. In addition, participating employees of JPMC 
and its affiliates likely subscribed for interests in the ESCs with the 
expectation that the ESCs would be managed by an affiliate of JPMC.
    7. Applicants state that Applicants and certain other affiliated 
persons of the Applicants have previously received orders under section 
9(c) of the Act, as the result of conduct that triggered section 9(a), 
as described in greater detail in the application.

Applicants' Condition

    Applicants agree that any order granting the requested relief will 
be subject to the following condition:
    Any temporary exemption granted pursuant to the application shall 
be without prejudice to, and shall not limit the Commission's rights in 
any manner with respect to, any Commission investigation of, or 
administrative proceedings involving or against, Covered Persons, 
including without limitation, the consideration by the Commission of a 
permanent exemption from section 9(a) of the Act requested pursuant to 
the application or the revocation or removal of any temporary 
exemptions granted under the Act in connection with the application.

Temporary Order

    The Commission has considered the matter and finds that the 
Applicants have made the necessary showing to justify granting a 
temporary exemption.

Accordingly,
    It is hereby ordered, pursuant to section 9(c) of the Act, that 
Applicants and any other Covered Persons are granted a temporary 
exemption from the provisions of section 9(a), solely with respect to 
the Injunction, subject to the condition in the application, from July 
8, 2011, until the Commission takes final action on their application 
for a permanent order.

    By the Commission.
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-17816 Filed 7-14-11; 8:45 am]
BILLING CODE 8011-01-P